EUR/USD – Euro Lower Ahead of ECB LTRO, US Key Numbers

EUR/USD has posted losses on Thursday, as the pair is trading in the low-1.24 range. Still, the euro has enjoyed a solid week, up 150 points since Monday. On the release front, it’s a busy day. In the Eurozone, the ECB will offer long-term loans under its TLTRO program. German CPI improved to 0.0%. In the US, today’s major events include unemployment claims and retail sales.

The ECB will make its second TLTRO (Targeted Long Term Refinancing Option) on Thursday. This lending program aims to bolster the economy by increasing bank lending to the real economy. The first TLTRO in September was not a success, as the take-up by European banks amounted to 82.3 billion euros, well off the estimate. The estimate for the TLTRO stands at EUR 148.2 billion, but if the take-up is low, there will be more pressure on the ECB to introduce quantitative easing early in 2015. Meanwhile, the Eurozone continues to struggle with low inflation levels, and a senior ECB official is warning of deflation dangers. Speaking in Washington on Tuesday, ECB board member Peter Praet said that falling oil prices could push Eurozone inflation into negative territory. Such a scenario would spell bad news for the sluggish Eurozone economy and could push the euro to lower levels.

German numbers have been mixed recently and the trend has continued this week. On Tuesday, Trade Balance climbed to EUR 20.6 billion, marking a 3-month high. This easily beat the estimate of 18.1 billion. On Monday, German Industrial Production didn’t look sharp, posting a weak gain of 0.2%. This was a sharp drop from the 1.4% gain a month earlier. As the Eurozone’s largest economy, the euro is sensitive to German data and could lose more ground if key German data misses expectations.

US employment data has rebounded in impressive fashion and the good news continued on Tuesday, as JOLTS Job Openings climbed to 4.83 million, up from 4.74 million a month earlier. This beat the estimate of 4.81 million. Last week, Nonfarm Payrolls shot up to 321 thousand in November, stunning the markets which had expected a rise of 231 thousand. There was also a rise in wages, which should translate into stronger inflation numbers. The unemployment rate held steady at 5.8%, matching the forecast. The excellent Nonfarm Payrolls should help allay concerns about whether the economy can weather an expected rate increase in 2015.

EUR/USD for Thursday, December 11, 2014

EUR/USD December 11 at 10:15 GMT

EUR/USD 1.2418 H: 1.2495 L: 1.2415

EUR/USD Technical

S1

S2

S1

R1

R2

R3

1.2143

1.2286

1.2407

1.2518

1.2688

1.2806

EUR/USD is choppy on Thursday. The pair is putting pressure on support at 1.2407.

1.2407 is providing weak support. 1.2286 is stronger.

1.2518 is a strong resistance line.

Current range: 1.2407 to 1.2518

Further levels in both directions:

Below: 1.2407, 1.2286, 1.2143, 1.2042 and 119.26

Above: 1.2518, 1.2688, 1.2806 and 1.2930

OANDA’s Open Positions Ratio

EUR/USD ratio is pointing to gains in short positions on Thursday, continuing the trend we have seen for most of the week. This is consistent with the pair’s movement, as the euro has posted losses. The ratio is pointing to a majority of short positions, indicative of trader towards the euro continuing to lose ground.

EUR/USD Fundamentals

7:00 German Final CPI. Estimate 0.0%. Actual 0.0%.

7:45 French CPI. Estimate +0.2%. Actual -0.2%.

9:00 ECB Monthly Bulletin.

9:00 Italian Industrial Production. Estimate +0.3%. Actual -0.1%.

10:15 ECB Targeted LTRO. Estimate 148.2B.

13:30 US Core Retail Sales. Estimate 0.1%.

13:30 US Retail Sales. Estimate 0.4%.

13:30 US Unemployment Claims. Estimate 299K.

13:30 US Import Prices. Estimate -1.7%.

15:00 US Business Inventories. Estimate 0.2%.

15:30 US Natural Gas Storage. Estimate -45B.

18:01 US 30-year Bond Auction.

* Key releases are highlighted in bold

*All release times are GMT

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.

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